Health Care

Blue Cross appeals rate decision on its Vermont Health Plan

Blue Cross Blue Shield of Vermont headquarters in Berlin. Photo by Andrew Stein/VTDigger
Blue Cross Blue Shield of Vermont headquarters in Berlin. VTDigger file photo

Blue Cross Blue Shield of Vermont and one of its subsidiaries — the Vermont Health Plan — are appealing a decision by state regulators to reduce a rate increase request. The insurance company says the lower rate could hurt the solvency of the Vermont Health Plan.

The Green Mountain Care Board went against the advice of the Department of Financial Regulation and its own actuaries this month when it reduced the Vermont Health Plan’s request to increase to its reserve fund from 2 percent to 0.5 percent, filings with the state show.

The Vermont Health Plan is a for-profit company owned by Blue Cross that is used primarily by small to mid-sized companies with 50 to 200 employees, according to Kevin Goddard, vice president of external affairs. It has 5,610 policyholders covering 10,743 lives.

If the Vermont Health Plan’s full increase to its reserves had been approved, monthly premiums for members would have increased $7.12. A separate 65-cent increase to cover administrative costs was also rejected by the board and is not being appealed.

The board’s order will hold down rates for people paying premiums to The Vermont Health Plan, but Goddard said the decision would “erode” the health plan’s surpluses and impact its long-term solvency.

Blue Cross Blue Shield is appealing the decision.

As part of the health insurance rate review process, the board looks at whether a requested rate is affordable, promotes quality and access to care, protects insurer solvency and complies with state law.

In a solvency analysis submitted to the board, the Department of Financial Regulation officials supported the 2 percent increase. The agency wrote that the reserve fund should not be revised downward unless the board’s actuaries “expressly opined” that the increase was excessive. The actuaries consulted by the board suggested the 2 percent could be safely reduced to 1 percent.

In its decision, the board states that despite the findings of its actuaries, it determined that a 0.5 percent increase was an “adequate buffer” and would result in more affordable rates for consumers.

The Office of the Health Care Advocate, a project of Vermont Legal Aid, which represents consumers in the rate review process, suggested a 1 percent increase.

Attorneys for the Office of the Health Care Advocate said they were still reviewing Blue Cross’ appeal, which asks for the original 2 percent hike, and are planning to file a response to the appeal.

Jacqueline Hughes, of the Montpelier firm Storrow, Buckley and Hughes, is representing Blue Cross and The Vermont Health Plan in the appeal process.

Hughes submitted a motion for the board to reconsider its decision Friday, in which she argues that the board did not give “appropriate weight” to the Department of Financial Regulation’s solvency analysis.

Her argument highlights the statutory overlap between the Department of Financial Regulation and the Green Mountain Care Board. DFR still has the responsibility to monitor an insurer’s overall solvency, and it must also provide opinions to the board on how rates could impact a company’s financial health. The board is responsible for approving health insurance rates.

The board plans to move “expeditiously” on the motion for reconsideration, but there’s no deadline for making a decision, according to its attorney.

The filing is separate from the 9.8 percent rate increase Blue Cross requested for the health plans it offers on Vermont Health Connect, the state’s federally mandated online marketplace.

Hearings on the exchange rate increases are scheduled for Aug. 12-13.

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Morgan True

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  • Keith Stern

    Thank you Democrats for Obamacare, the single most important legislation that will help destroy the middle class.

    • Steve Robbins

      And just how will the legislation destroy the middle class?

  • The Green Mountain Care Board (GMCB) has elected to ignore the insurance experts at the Department of Financial Management its own actuaries by deciding to reject the BCBS rate request.

    This decision by the GMCB demonstrates an abandonment of its responsibility to objectively review rate requests. Instead of relying on the experts plus conventional and accepted rate review practices, the Board has decided surrender to political expediency.

    With this decision, the GMCB has suppressed rates, a very dangerous practice when regulating insurance.

  • John Greenberg


    Your conclusions don’t seem to be based on any reading of the actual decision (which is only 5 pages long). You write: ‘The Green Mountain Care Board (GMCB) has elected to ignore the insurance experts at the Department of Financial Management its own actuaries by deciding to reject the BCBS rate request.”

    Actually, the Board couldn’t have accepted BOTH recommendations, because they were at odds with one another.

    I’m no expert on insurance issues, but there’s nothing in this decision that looks even vaguely like “political expediency” to me.

    You may have a case, but you sure haven’t made it here.

    That, actually, is the gist of the Board’s denial of (most of) the rate increase: the company has the burden of proof and failed to meet it.